How to Form a Nonprofit in Massachusetts

Two people forming a nonprofit in Massachusetts

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OVERVIEW

To form a nonprofit corporation in Massachusetts, follow the steps below. It is also advisable for your Massachusetts nonprofit to obtain a 501(C)(3) status from the IRS, as this will enable federal tax exemption for your Massachusetts nonprofit corporation. Learn more about 501(c)(3) nonprofits here.

To start a 501(c)(3) nonprofit corporation in Massachusetts you must:

  1. Form a nonprofit corporation according to the rules of the state.
  2. Apply for 501(c)(3) tax-exempt status with the IRS.

You will need the following documents:

Forming a Nonprofit in Massachusetts is easy, just follow these 6 steps:

Step 1: Name Your Massachusetts Nonprofit

The name you select for your nonprofit will establish its brand. It is the first thing most people will learn about your organization. It is important to pick a name that both aligns with your mission and follows the rules of naming in Massachusetts.

To learn more, read our How to Name a Nonprofit in Massachusetts guide.

Nonprofit Naming Guidelines

Unless your organization is a church or a religious institution, the name of your organization must indicate that it is a corporation

Is the Name Available?

The name of your nonprofit must be distinct from that of any other corporation in Massachusetts. Use the Business Entity Search to make sure the name you have selected has not already been taken.

Is the Website Domain Name Available?

If you plan to have a website for your organization, you will want to make sure that a suitable URL is currently available on GoDaddy.

You may want to buy any URLs you are interested in, to make sure they are available when you are ready to finalize and create your website.

Find a Domain Now

Service provided by GoDaddy.com

After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

Step 2: Appoint A Massachusetts Registered Agent

A nonprofit corporation in Massachusetts is required to have a resident agent with a Massachusetts address.

What is a Registered Agent? A registered agent is an individual or business entity responsible for receiving important legal documents on behalf of your business. Think of your registered agent as your business' point of contact with the state.

Who can be a Registered Agent? A registered agent must be a resident of Massachusetts or a corporation, such as a registered agent service, authorized to transact business in Massachusetts. You may elect an individual within the company including yourself.

Incfile provides the first year of registered agent service free with nonprofit formation ($49 + State Fees)

Step 3: Select Your Board Members and Officers

The directors of a nonprofit are responsible for overseeing the operations of the organization. come together to form a board.

Features of directors:

  • All the directors of an organization together form the board of directors.
  • The power and influence of the directors over the organization is as the board of directors, the directors do not have authority as individuals.
  • The board typically creates the policies that govern the nonprofit. The board of directors also oversee management-level hiring like that of the officers.

The officers of a nonprofit (such as the president or the secretary) are individuals with responsibilities, and the authority to execute based on their job descriptions.

Together, the officers and the board will come together to make up the organizational structure of your nonprofit.

An officer may also be on the board of directors and serve both roles if allowed to do so by the organizational bylaws created by your team.

The organization structure of your nonprofit in Massachusetts MUST include:

  • At least 3 directors not related to each other
  • A president (who must also be a director)
  • A treasurer
  • A clerk

To learn more, read our guide on how to select board members for your nonprofit.

Step 4: Draft Bylaws And Conflict Of Interest Policy

There are two documents that will be central to the running of your nonprofit:

Bylaws: These are the rules that determine how your organization will be governed and run.

You can think about it as a constitution for your nonprofit. It makes the rules and priorities clear for everyone involved.

In your bylaws be sure to include:

  • How the nonprofit will be governed – the role of directors and officers
  • How meetings are held, voting procedures, electing officers or directors.
  • How records will be kept and managed
  • How disputes will be handled
  • How bylaws will be added amended in the future

NOTE: Keep in mind that the bylaws will supplement any rules set forth by the federal government or the state.

Ready to get started? Check out these bylaws templates which you can customize to suit the needs of your organization.

The Conflict of Interest Policy: These are the rules set to ensure that decisions being made for the nonprofit are based on what is best for the organization, and not being motivated by what is best for individuals.

Under Appendix A the IRS provides a sample Conflict of Interest Policy.

NOTE: You will want to have both these documents drafted before for your first organizational meeting

Step 5: Conduct An Organizational Meeting

An organizational meeting is the first official meeting of your nonprofit! Some of the things that are discussed in a typical organizational meeting:

  • Taking attendance to show you have a quorum (minimum number needed)
  • Appointing temporary officers, chairmen, secretary, etc.
  • Adoption of the bylaws
  • Adoption of conflict of interest policy

Don’t forget to record “minutes” of the meeting and have it signed by all attending directors. Here are some corporate minutes templates to help you get the ball rolling.

NOTE: This meeting must occur before your organization can apply for 501(c)(3) federal tax exempt status.

Step 6: File The Massachusetts Article of Organization

To become a nonprofit corporation in Massachusetts you can file articles of organization by mail or online.

Here are the sections that you will need to complete.

Article 1: Corporate Name
Enter the name you selected in Step 1.

Article 2: Purpose
Describe the purpose of your nonprofit organization.

In order to qualify for 501(c)(3) status, the organization’s purpose must explicitly be limited to one or more of the following:

  • Charitable
  • Religious
  • Educational
  • Scientific
  • Literary
  • Testing for public safety
  • Fostering national/international amateur sports competition
  • Preventing cruelty to animals/children

NOTE: You can read the IRS guidelines here.

Article 3: Members
Describe whether or not your organization will have members.

If there will be members you can include details about the different categories of members and any rules governing them.

You are not required to go into detail here since those details will be covered in the organization’s bylaws from Step 4.

Article 4: Other Lawful Provisions
You must include provisions ensuring that in the event your organization is dissolved, the assets of the organization will be used towards tax-exempt purposes.

Section 5 of this sample document provides an example of these provisions required for 501(c)(3) eligibility.

Article 5: Bylaws & Officers
This article is to state that the organization has already adopted its bylaws and elected key officers such as directors, president, and treasurer. These should have all been covered during your organizational meeting from Step 5.

Article 6: Effective Date of Organization
This section allows you to determine when you want your nonprofit corporation to officially form.

Typically the corporation forms on the date it is approved by the Secretary of the Commonwealth but you can choose a different date up to 30 days after the date of filing.

Article 7a: Office Address
Enter the office address for your organization.

Article 7b: Effectiveness of Filing
Enter the name, home address and post office address (if applicable) of each director and officer of the organization.

Article 7c: Fiscal Year
Indicate when the fiscal(tax) year will end for your organization.

NOTE: Most organizations pick December 31st

Article 7d: Resident Agent Information
Enter information about the registered agent you appointed in Step 2.

Execution
When you fill in the contact information, sign, and date the form, you are acting as the incorporator and affirming everything written in the form. The person acting as the incorporator does not need to be a director, officer or member of the nonprofit.

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There are two ways to submit your Articles of Organization: online or by mail.

The filing fee is $35 and the online filing fee is $40.

File the Articles of Organization through the Secretary of State’s online portal.

Submit the Articles of Organization form to the mailing address found below:

Secretary of State
Corporations Division
Commonwealth of Massachusetts
One Ashburton Place, 17th Floor
Boston, MA 02108

Nonprofit Formation FAQ

How long does it take to process the Massachusetts Articles of Organization?

If filed online, it typically takes about 2 business days to hear back from the state. If you file by mail, you can expect a response in 2-4 business days.

How do I contact the Secretary of State for more information?

You can call for information at (617) 727-2850 or visit them at their website.

Nonprofit Operating Procedures and Housekeeping

Get An EIN

An EIN or Employment Identification Number (also called a Federal Tax Identification Number or Federal Employment Identification Number), is used to uniquely identify a business entity. You can think of the EIN as a social security number for your nonprofit.

The EIN is required for your organization whether or not it will have any employees.

The EIN will be used for things like:

  • Filing for 501(c)3 status
  • Opening a bank account
  • Applying for tax-exempt status
  • Submitting tax returns

Once your nonprofit is formed with the Secretary of State (Step 6), you can apply for an EIN for your nonprofit via Form SS-4.

NOTE: If you use a nonprofit formation service, EIN assistance might already be included in the package.

Open A Business Bank Account

You will typically need to take with you the following items to open a bank account for your nonprofit:

  1. The EIN for the nonprofit
  2. A copy of the nonprofit’s bylaws
  3. A copy of the Certificate of Formation

If your nonprofit has several directors or officers, some banks may also ask for proof that you are authorized to open the account on behalf of the nonprofit.

There are many great options when it comes to picking a bank. Here are the reviews of the top 5 business bank accounts we recommend.

NOTE: It is always best to call ahead. Your bank may require some additional documents.

Start a Corporate Records Book (Optional)

As a nonprofit corporation, your organization will need to keep track of many important documents. This includes documents such as:

  • The Articles of Organization
  • EIN
  • Tax forms
  • Nonprofit bylaws
  • Meeting minutes

We recommend starting a dedicated corporate records book early so that as you start receiving these critical legal documents, they can be kept organized from the very beginning.

While you can keep track of everything using supplies from any office store, it may be easier to use a pre-assembled kit that has the things you need in one place. Blumberg and Bindertek have some options specifically designed to meet the needs of nonprofit corporations.

How to Apply for Tax Exemptions

Once your nonprofit applies for and receives 501(c)(3) tax-exempt status, it can use that letter to also become exempt from Massachusetts state taxes

Applying for Exemption from Federal Taxes - 501(c)(3) Status

Before your nonprofit can apply for 501(c)(3) status it must:

  1. File the Articles of Organization with the required provisions (As covered in Step 6, Articles 2 & 4)
  2. Adopt the bylaws and the conflict of interest policy
  3. Have an EIN number

In order to file for tax-exempt status, most organizations will need to file Form 1023 online or by mail (fee: $600).

There are two exceptions:

  1. If your organization’s annual gross receipts are below $50,000 then you may be able to file Form 1023-EZ (fee: $275). Check your eligibility here.
  2. If your organization is a religious institution or has annual gross receipts in each taxable year of no more than $5,000 you may be considered tax-exempt without filing Form 1023. Religious institutions and organizations with gross receipts under $5,000 can still choose to file Form 1023. This would give them a determination letter that specifies that contributions to the organization are tax-deductible.

Applying for Exemption from State Taxes

For Corporate Income Tax Exemption: Once your organization has received 501(c)(3) status, send a copy of the IRS determination letter along with a copy of the articles of organization to the Corporate Exemptions Division of the Massachusetts Department of Revenue.

For Sale Income Tax Exemption: Send a copy of the IRS determination letter along with a letter of explanation. The department will review your case and let you know whether your organization qualifies for exemption.

Nonprofit Unit
Department of Revenue
Data Integration Bureau
P.O. Box 7022
Boston, MA 02204

Info. & Forms: (617) 887-6367
Website: www.dor.state.ma.us

Filing Fee: $0

Nonprofit Tax FAQ

When should an organization apply for federal tax exemption?

Form 1023/1023-EZ must be filed within 27 months from the end of the first month your organization was created.

How long will it take for the IRS to process Form 1023/1023-EZ?

Soon after sending your application you should receive an acknowledgment of receipt of your application.

If your application is simple and complete, IRS will send your determination letter within:

  • 90 days for Form 1023-EZ
  • 180 days for Form 1023

If you have not heard from them by that time you can call (877) 829-5500 to enquire about your application.

Protect Your Nonprofit

Get Business Insurance

As with any other business, there may be risks involved in running the nonprofit. Getting insurance for your nonprofit allows you to focus on your passion while minimizing your liability.

Here are some of the common types of insurance you may want to consider for your organization:

  • General Liability Coverage
  • Directors and Officers Coverage
  • Social Service Professional Coverage

Your coverage needs will vary based on your organization and the work you do.

Properly Sign Legal Documents

There will be times when you will be signing a document on behalf of your nonprofit. It is important that these times are easily distinguishable from when you are signing a document as an individual. If a document isn’t properly signed, you might suddenly find yourself personally responsible for something the organization should have been liable for.

To avoid such confusion we recommend you and all the members of your organization follow the following format:

  1. The official name of your nonprofit
  2. Your signature
  3. Your full legal name
  4. Your position in the organization

Keep Your Nonprofit Compliant

Register with the Attorney General

All nonprofits in the state of Massachusetts, regardless of their purpose, are required to apply to register as a charity. Once registered with the Attorney General’s Office, your organization can legally conduct business.

For this application you will need:

  • The Articles of Organization
  • List of the current officers/directors and their addresses
  • Copy of the bylaws
  • IRS letter designating it as 501(c)(3) tax exempt organization (if applicable)

The application must be sent to:

Office of the Attorney General
Non-Profit Organizations/Public Charities Division
One Ashburton Place
Boston, MA 02108

With a filing fee of $100.

If your organization has solicited for donations in the past or intends to solicit for donations in the future, you will also need to fill out and send Schedule A-2 with an additional $50 fee.

For more information, you can contact the Attorney General’s office at

(617) 727-2200

or www.mass.gov/ago

Determine Massachusetts Business Permits And Licenses

Business licenses in the state of Massachusetts are regulated by individual counties and cities. Contact your local city clerk’s office to find the requirements for your organization in your area.

You can also use the Small Business Administration’s Business License & Permit Lookup tool.

File Required Periodic Reports

Your nonprofit is required to file an annual report by the 1st of November of each year with the Secretary of the Commonwealth’s office.

You can opt to mail or form or file it online.

Failing to file the annual report for two consecutive years may result in the administrative dissolution of your organization.

Employees

If your organization will have employees you must register with the Massachusetts Division of Unemployment Assistance and the Massachusetts Department of Revenue.

You can file with the Massachusetts Division of Unemployment Assistance online or contact them at:

Massachusetts Division of Unemployment Assistance
Charles F. Hurley Building
19 Staniford Street
Boston, MA 02114

Information: 617-626-5075
Website: www.mass.gov/lwd/unemployment-insur/

You can refer to the Massachusetts Employer's Guide to Unemployment Insurance for additional information.

You can file with the Massachusetts Department of Revenue online or contact them at:

Nonprofit Unit
Department of Revenue
Data Integration Bureau
P.O. Box 7022
Boston, MA 02204

Information & Forms: (617) 887-6960
Website: www.dor.state.ma.us

Public Inspection Rules for 501(c)(3) Organizations

Organizations that have been granted the 501(c)(3) status are required to disclose the following documents to the public when requested:

  • Annual returns for 3 years after the due date (this includes returns like Form 990, 990-EZ, 990-PF, and any Forms 990-T)
  • All Form 990 Schedules (except portions of Schedule B), attachments and supporting documents.
  • Application of exemption and all supporting documents such as Form 1023
  • The official paperwork from the IRS that shows that your organization has tax-exempt status.

The following do NOT need to be shared with the public

  • Portions of schedule B of Form 990/990-EZ that identify the contributors. ( You only need to disclose the amount contributed and the nature of the contributions)
  • Any unfavorable rulings such as an earlier denial of tax-exempt status.
  • Any information the IRS has said you can withhold. This may include things like sensitive patents and trade secrets.

Documentation FAQ:

How long do I have to produce these documents if requested?
Ideally within the same day. If your organization doesn’t have an office or maintains limited hours during parts of the year, the information should be made available within two weeks.

Do I need to provide copies of the documents?
If someone asks for copies in person or in writing you must provide them with copies.

Can I charge for copies?
You can charge a reasonable amount for making copies of the documents requested.

NOTE: It may be easiest to have the documents available on your website so that anyone who requests copies can be sent to the site. This allows you to stay compliant without having to spend a lot of time dealing with document requests.

Annual Returns for Tax-Exempt Organizations

Most tax-exempt nonprofit organizations are required to file an annual return with the IRS (Click here for a list of exceptions).

Which form you should use to file the annual returns depend on the annual gross receipt amounts for your organization.

‘Gross receipt’ is defined by the IRS as “the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses”

  • For gross receipts < $50,000 --- File 990-N
  • Gross receipts <$200,000 and total assets <$500,000 --- File 990-EZ
  • Gross receipts > $200,000 or Total assets > $500,00 --- File 990

For any questions, you can call the IRS at

  1. (800) 829-3676 (Form-related questions)
  2. (800) 829-1040 (General information)

When is form 990 due?

You have a little over 4 months after your taxable year comes to an end to file Form 990. It is due on the 15th day of the 5th month. So if your taxable year ends on Dec 31st, your form 990 is due on May 15th.

NOTE: If your organization fails to file form 990 for 3 consecutive years, it will automatically lose its tax-exempt status.

Report Unrelated Business Income

If your organization has a gross income of >$1000 from a trade or business that is not related to the stated purpose of the organization, then it must file Form 990-T to pay tax on that income.

If you expect to pay $500 or more for the year in taxes on unrelated business income, your organization must pay a quarterly estimated tax on the unrelated business income using Form 990-W.

State of Massachusetts Nonprofit Quicklinks